Sunday, June 18, 2017
It has been said that a human being is the only animal you can't skin. This is because when you start to skin one of us, we holler and scare off everyone else. Believe it or not this is what happens to any business in America when they try to skin their customers. When I say "skin" I mean they are way out of line in terms of their prices, they have very poor service, or inferior shoddy merchandise. Real, honest value is what most customers look for and when they don't get it, they take their business somewhere else.
A good example of this happened to me some time back when I went into a downtown restaurant and ordered a small barbecue sandwich and a soft drink. When I got the bill it was over $9, which was about $2 too much based on economic conditions in our area and what the competition was charging. Needless to say, I have not been back to this restaurant, and when enough customers feel the same way, they will either become more competitive or go out of business. The wonderful thing about the American Free Enterprise System is that it has fostered competition, and today there are more than 50 restaurants in our community.
The more I thought about this little scenario, the more I realized there are only two major goals that every retail business must achieve if they are to be successful. The first is that they must develop a steady stream of happy, satisfied customers, and the second is that they must earn a profit. Needless to say, to reach each of these goals requires a good deal of insight, education, experience, and an understanding of human nature. Since we are all consumers and want honest value for the money we spend, a hard look at this could be very helpful for you. One of the sad things that most people don't think about when a business closes its doors is that a number of employees lose their jobs.
Since these major goals are paramount for a business to achieve success, the logical question then becomes, "How does a business develop a steady stream of happy, satisfied customers, and next what is necessary for the business to earn a profit?" Let's take them one at a time, beginning with the happy, satisfied customers. The starting point is to realize there must be a need, or perceived need, for their products or services, for the business to prosper. The next step is to understand that the "customer" is the boss and that each employee is committed to providing excellent, courteous service. This is why having a good training program is vital to the long-term success of the business, as having good, well-trained employees is the only way a business can prosper over the long haul.
Next, the business must earn a profit if they want to be around very long. It should be noted that the majority of businesses that fail do so within the first couple of years because they are undercapitalized. A profit is the difference between the total volume of retail sales and the total cost of operating the business. This includes rent, utilities, labor, taxes, insurance, advertising, upkeep and repairs, and, of course, the cost of merchandise. For a business to succeed their prices cannot be too high, they must keep their overhead low enough to pay themselves, in whatever form it takes.
Our American Free Enterprise System may not be perfect, but it's still the best system ever developed anywhere on earth. I never cease to be amazed each time I go into a Wal-Mart and note the terrific number of items that are available.Editorial on 06/18/2017
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